A Look at the Affordable Care Act: Tax Provisions

Each month AssuredPartners NL will discuss a different aspect of the Affordable Care Act. Stay tuned for more updates on the second Thursday of each month. Clickhere for more Affordable Care Act blogs.

The Affordable Care Act reforms impact the U.S. health care system across the board, with new health care requirements and mandates, patient protections and cost limitations. To support and fund the reforms, the Affordable Care Act levies new taxes for individuals and employers alike. Here is an overview of several important health care taxes imposed by the Affordable Care Act reforms, from Zywave:

Tax Provisions

Small Business Health Care Tax Credit
This tax credit, available through the SHOP exchange, applies to employers that have fewer than 25 full time employees, pay average annual wages of less than $50,000 per/full time employee and pay at least half of employee health insurance premiums. Beginning in 2014, the maximum credit will increase to 50 percent to small business employers and 35 percent for small tax-exempt employers. The credit is available for employers for two consecutive taxable years.

Individual Shared Responsibility Provision
Also known as the individual mandate, the individual shared responsibility provision calls for all non-exempt individuals to have minimum essential health coverage or pay a penalty. This provision went into effect on Jan. 1, 2014.

Employer Shared Responsibility
Beginning in 2015, large employers may be subject to fees if they do not provide health care coverage to full time employees and dependents, or if the plans they provide is not affordable or does not meet minimum value. This is also known as Pay or Play rules. Large employers are defined as employing more than 50 full time employees. Full time employees are defined as employees that work 30 a week or more.

The above tax provisions are not exhaustive, and your organization and employees may be subject to additional taxes. Contact your employee benefits agent to learn more about the Affordable Care Act reforms, compliance efforts, and other important taxes. To learn more or contact an agent, visit AssuredPartners NL Employee Benefits.

This post is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.